The first stage of starting a business is always exciting and exhilarating. Dreams start becoming a reality as services and products are defined, refined, and tested. At this point in time, many decisions are made which impact the long-term of the company, from the branding, definition of audience, as well as financial and legal structure.
Making a mistake at this point of the game can undermine all the work that you are putting into your business, or at least leave a mess to untangle later on, implying the dedication of time and resources to it at a stage when all attention should be spent on moving forward and growing. However, hindsight is always 20/20, and thankfully we can draw from the experiences and mentorship of others to avoid making mistakes they had either made themselves or have witnessed in the industry.
While setting up your business, even if it is initially only a side project or an extra stream of income, these are some important tasks to accomplish before you get to far on the business development front.
Before you can set upon your life dream of being a work-from-home caterer or a open a craft brewery, there is a lot of research to be done. Some you might have already done for coming up with your business idea in the first place, such as market needs, local demographics, trends, competition, pricing, and more. Though this research will be more than just prime you for business success, but could also protect you from lawsuits from competition or from ignoring industry standards and regulations. These aspects need to be worked into your strategy and your business plan. No one will excuse you if you later whisper “I didn’t know.” The truth is that it’s your job to know, so start learning!
- Seek Legal Advice
At the beginning of your business journey, it seems impossible that you and your partner could ever get in a fight, or that a disgruntled customer, even employee, would want to sue you. However, if you seek legal advice from the very beginning, you can structure your business and your paperwork to protect you, your livelihood, and your reputation. Ask your lawyer about whether you should incorporate, how to work out a potential partnership, have a scan over a rental agreement, and even advise you on what to look for in your professional liability insurance. This will save you time and money in the future and is an investment for the entirety of your business’s existence, and this way you already have a relationship with attorneys who are capable to act in various commercial disputes, such as disputes between shareholders, non-compete clauses, commercial litigation, etc.
- Register Your Business
Now it’s time for you to register your business in your jurisdiction. This will create an entity for all your business interactions. Now you will comfortably be able to set up a corporate business account at a bank, put in bids for relevant requests for proposals, and collaborate with other brands. There are different types of business, depending on the area in which you are doing your business, so make sure to choose the one that is best suited for you and your needs.
- Keep Track of Expenses
Starting up a business can be expensive. You need to purchase inventory, tools, supplies, hire contractors to work on your branding, marketing, legal, and accounting needs, and all of this before you have a chance to really make too many sales. No one will be surprised if at the end of the year you will be in the red, or only just barely in the black. However, make sure to keep track of all the finances, right from the beginning. These expenses can be used to get you a tax break in the first year, where the last thing you want to do is pay a huge tax bill. Be honest in your calculations and your reporting, because this in not a time during which you want to be flagged and audited by your local authorities. That would not just slow you down, it could be your downfall.
While you’re all holed up in your basement working out how to get traffic to you website, you might be making the biggest mistake of all- avoiding human contact. Many of those starting up a business are so dedicated to their laundry list of items to do that they completely forget to tap into the power of a good network. Good connections in the industry or business community will not only be valuable in the future, you can use them right away to launch yourself into success. Make the most of mentorship opportunities, industry programs and more to get the word out about your company, meet others whose services you could use, and get a feel for the local business atmosphere.
Yes, we all learn from our own mistakes, but if we can learn from others’, then why waste time and money making them ourselves. Start up your business the right way using these 5 pieces of advice, formed from common mistakes many entrepreneurs and business owners make.